Legislators ponder county road maintenance money

HELP WITH COUNTY ROADS

Some of the bills proposed in the 83rd Texas Legislature that would assist counties in oil and gas production areas in paying for road maintenance.

• HJR 63 - Proposing a constitutional amendment dedicating a portion of the state's oil and gas tax revenue to construction, reconstruction, acquisition, and expansion of roads in counties in which a shale formation is located.

• HB 2799 - Relating to the transfer from the state to a county a portion of the revenue derived from oil and gas leases of land owned by the county to be used by the county for road maintenance purposes.

• HB 3639 - Relating to a fund for certain county transportation infrastructure projects and the creation of County Energy Transportation Reinvestment Zones.

SOURCE: Texas Legislature OnLine

ROAD STUDY

A study completed in the summer 2012 evaluated 394 miles of DeWitt County roads and determined that the cost of providing a road system suitable for the public and the oil and gas industry could cost as much as $432 million.

DeWitt County Judge Daryl Fowler is continuing his quest for cash for counties affected by Eagle Ford Shale traffic.

Fowler, a member of both the Texas Department of Transportation Energy Sector Task Force and the Railroad Commission's Eagle Ford Shale Task Force, has been lobbying for more than two years for counties to receive more money from the state to assist in maintaining county roads.

He has continued those efforts during the session of the 83rd Texas Legislature.

"We want money to help maintain our roads. That's all we are asking for," Fowler has said more than once to any group that will grant him an audience.

One of Fowler's proposals - supported by a coalition of counties (DeWitt, Gonzales, Karnes, Live Oak and McMullen) - includes a reallocation of the state severance tax, which is allocated to the Permanent School Fund and the Rainy Day Fund.

During the current session of the Texas Legislature, Fowler has testified before both the House Energy Resources Committee and the House Committee on Appropriations regarding bills that are trying to ease the financial burden on oil and gas producing counties that are experiencing high levels of heavy-truck traffic.

On Tuesday, he was invited to testify before the Senate Transportation Committee and had meetings planned with the Texas Oil and Gas Association and the County Judges and Commissioners Association of Texas government affairs specialists.

"I have about 16 bills on my radar," said Fowler, noting that the coalition's strongest support is behind Senate Bill 1434 and House Bills 2798, 2799 and 2800.

Hegar wants to help

District 18 Sen. Glenn Hegar, R-Katy, introduced SB 1434. The three House bills supported by the county coalition are authored by District 42 Rep. Richard Raymond, D-Laredo.

Hegar acknowledges the boom that the oil and gas activity has brought to the state and understands the need to take care of rural roads.

"Because of the great benefits the oil boom is bringing to working Texas families, counties and communities and because of what it means to our economy and the freedom granted by mobility, we must plan carefully for the future," Hegar said in a recent joint news release with District 19 Sen. Carlos Uresti, D-San Antonio.

Uresti has authored three bills related to the issue.

"We don't want to kill the golden goose that has brought so much prosperity and that means taking care of our roads," wrote the senators.

Hegar's bill, in the Senate Committee on Finance, would make changes to the effective tax rate calculation for ad valorem taxes, which are taxes imposed on the value of property. If the bill is passed, these changes would allow counties to capture increased revenue from oil and gas properties in their taxing districts.

"Over the last several years, large oil-patch trucks have pummeled county roads that were built for cars, pickup trucks and farm equipment," continued the news release.

"County roads in the Eagle Ford Shale, Barnett Shale and Permian Basin regions are deteriorating under the wheels of these heavy trucks, and counties need help with maintenance and repair."

Only about $6 million of Texas Department of Transportation's biennial budget is dedicated to county roads while there is a demonstrated need of more than $700 million, according to the news release.

No CETRZ

One proposal included in some of the proposed bills that Fowler is not fond of is the creation of new County Energy Transportation Reinvestment Zones.

"This creates a new local layer of government or a new state agency to dispense and/or receive money from the so-called Rainy Day Fund," Fowler said.

The zones would be governed by a noncompensated board which would include oil and gas industry representatives in addition to regional elected officials, Fowler explained.

Potential allocations would be based on a formula that uses variables such as overweight-axle fees collected by the state, drilling completions in the county and severance tax collections associated with production in the county.

"The CETRZ would rely on tax levy from a depleting asset (as opposed to real property) and may never yield an incremental tax if the price of oil and gas falls, if drilling slows down or ceases or if there is a federal moratorium on hydraulic fracturing or an environmental disaster or any number of other scenarios," Fowler said.

"Dedicating a CETRZ and the tax levy would be like hoping to fill a bucket with water while the plug is missing from the bottom," said Fowler.

Money likely coming

Fowler says he is hopeful yet realistic about counties getting the help they need.

"We have been told that a continuing stream of funds from severance tax or rainy day funds will not happen," Fowler said.

"Our best hope is for a one-time allocation this year from $400 million to $700 million statewide for oil-impacted counties. And even those funds would have to be cleared through TxDOT on a project by project basis. The time is running out, so the next two weeks are pretty critical."

Hegar and Uresti agree, stating in the news release, "The mechanics of this complex equation are still being debated. One approach contemplates the use of rainy day funds while another would alter property tax calculations in recognition of the explosive growth in shale plays across the state.

"Fortunately, there is a growing bipartisan consensus that we must make this investment.

"There are many roads to the future, and we have to maintain them if we're going to get there."